Migrants arrive on the island of Lampedusa. Photograph: AFP/Getty Images

They call it the "migrants' village". On entering the square at Riace, perched on a hill near the coast at the far end of Calabria, in Italy, you soon understand why. The girls running around are from Ethiopia, Eritrea or Somalia. Their mothers watch from the dressmaking workshop up the street. A sign is marked "Host Town".

At the other end of Italy the Tunisians who have landed on Lampedusa in recent weeks have met with hostility, but here the mayor, Domenico Luciano, told the government the locality was prepared to accommodate its share of the newcomers. About 40 other councils in the region have announced they are ready to follow the example set by Riace in July 1998.

When a boat carrying 300 Kurds landed, local people immediately opened their doors, triggering a sudden change of outlook. The foreigners were a boon for the village with its dwindling population.

At one point there were 2,500 inhabitants, but only a few hundred are still in the town. In 1972 the discovery off the coast of two fifth-century BC Greek sculptures – the Riace bronzes – turned into yet another disappointment. The statues were taken away to a museum in Reggio di Calabria, and with them the tourists who were supposed to flock here.

Riace decided it would fill the gap left by the many migrants who had moved to Canada or Australia with incomers. "There was once again some hope for the future, with a new sense of pulling together. People were leaving, the school had closed, there was a growing lack of basic services. We began to wonder if there was any point in planning public works, or even sustaining the village which was gradually emptying. But the new arrivals brought fresh hopes," Luciano says.

Sitting in the cafe or shopping at the market, local people now view the situation as normal. "The population has gone up again quite a lot, but I can tell you, the place was literally dead," said a local man.

A neighbour endorsed this view, looking at children running along the narrow streets: "For us, they are all grandchildren."

A non-profit organisation looks out for empty homes and refurbishes them to accommodate refugees. While they wait for the grants given to asylum-seekers, which are subject to long delays, the migrants can use a local currency in Riace, with vouchers bearing portraits of Gandhi, Martin Luther King or Che Guevara. When funds arrive, the shops send the vouchers to the local council for payment.

While they wait for formalities to be completed, the refugees are gainfully occupied. The silence of the streets is broken by the hum of workshops helping them to acquire skills in dressmaking, joinery, pottery or glass-blowing, set up as part of an integration scheme funded by the regional government.

Lubaba, who works at the glass factory, arrived here from Ethiopia three years ago after a long journey. From Libya she travelled to Lampedusa, then started another long trail through various Italian reception centres. Her journey ended in Riace, where she decided to stay. "I have a home, enough to live on, I'm learning a trade, and my daughter was born here," she says.

Around 6,000 refugees have passed through the village over the years. Many move on, but some of them stay and try to start their own craft or retail business.

It is not easy, as we heard from an Afghan woman from Herat who left home with her two children when her husband died, finally opening a shop selling knitwear in the village. "We make a living. In the winter it's OK, but selling woolly jumpers in the summer is a struggle," she explains, knitting as her daughter Faeze looks on.

Faeze is in no doubt about her future here in Italy. Speaking Italian with a powerful Calabrian accent, she says she feels "like the others at school". More than 200 refugees like herself and her family have chosen to settle permanently in Riace.